In the comic book He-Man and the Power Sword, the dastardly villain Skeletor sets out to unite both halves of the eponymous weapon in order to win control of planet Eternia.

After breaking through an ancient door in Castle Greyskull, he finds the twin to his own sword and exclaims: “With this, I am invincible! There is nothing I cannot do! Nothing!”

Banks that are bringing together their markets businesses and transaction banking units might not end up ruling the entire planet, but gaining control of the “flow universe” lies within their grasp, according to consultants.

Markus Böhme, partner at McKinsey in Germany, said: “There is an increasing link between flow businesses, in particular in rates, and FX business and transaction banking.

They feed each other and you need an engineering culture to make transaction banking work, and this is proliferating into fixed income, currencies and commodities and markets in general. Those that are able to do this will be very strong, and be the new ‘masters of the flow universe’.”

In a report earlier this year, the consultancy predicted four predominant business models would emerge after the wave of banking regulation had taken its toll.

One of these – the flow-driven universal bank – will be characterised, according to McKinsey, by true scale and operational and technological strengths.

This, along with an even greater focus on flow business and electronic trading, would allow them to provide high liquidity at low price, according to the report.

The term “flow monster” has come to mean a bank which has a dominant position in sales and trading, and more particularly in fixed, income, currencies and commodities.

But the connection between this business, and the less-glamorous aspects of banking, such as loans, cash management and transaction banking, is often ignored. Banks are beginning to wake up to the power of better aligning these operations.

These businesses – which incorporate trade finance, custody and card payments – generate steady revenues, require little capital compared with trading businesses, and can generate return on equity of more than 40%, according to bankers.

In addition, post-financial crisis, corporate treasurers are looking for a combined offering, where they secure financing, make the most efficient use of their cash balances and hedge their interest rate or foreign exchange risk.

According to a treasury survey conducted by the accounting giant PwC, almost 80% of respondents said they were keen to maintain a portfolio-style relationship, in which the bank would look at the overall return from the customer.

The report said: “A key factor in winning business and sustaining profitability is going to be the level of co-operation between credit and transaction teams.”

Rhomaios Ram, head of product management in global transaction banking at Deutsche Bank, said: “At one end of the scale, there are some investment banking transactions, such as M&A, which are a long way from transaction banking.

“But as you move along that scale, from the structured end of capital markets, through interest rate trading, foreign exchange and equities, then you start getting closer to transaction banking. In future I would expect a more holistic approach.

“If you look at banking in terms of a building, then cash management is the ground floor. From there, you can start adding on things like direct market access, right up to more structured transactions.

“Clients want to see the same process throughout, so increasing the co-ordination between these businesses allows us to deliver them together.”

This, in turn, has the potential to help offset declining revenue in banks’ trading businesses, which are suffering from a substantial fall in activity. According to data analytics firm Coalition, fixed-income revenues across the 10 largest banks are set to total $72bn in 2011, down 27% on 2010.

Julian Wakeham, partner at PwC, said: “A lot of the bigger investment banks are retrenching to their core clients, and by putting investment banking and transaction banking together, they are able to provide a holistic service.

The multiplier effect on revenue you get from servicing a client’s long-term funding needs, its short-term needs, its transaction processes and its working capital pool, which then flows through to capital markets activity and FICC treasury solutions, is substantial.”

Last December, Deutsche Bank set up a capital markets and treasury solutions group, encompassing debt capital markets, the corporate banking coverage group and the capital markets sales portion of transaction banking.

The division, which was set up to provide a one-stop shop for treasury clients, is headed by Miles Millard, the former global head of DCM.

The group is broken down into three units: a treasurer-focused coverage force; corporate treasury sales, which covers foreign exchange, derivatives, raw materials, shares and bonds; and origination, structured products and derivatives, which offers capital markets, liability and risk management and ratings advisory services.

Christian Meissner, co-head of global corporate and investment banking at Bank of America Merrill Lynch, identified the bank’s cash management product as one on which to build as it looked to gain traction in markets outside the US earlier this year.

Speaking to Financial News this summer, he said: “Those banks that don’t have a global cash management offering are at a huge disadvantage. It is a business that provides a substantial annuity stream.”

However, there is the potential for a culture clash between these two businesses, with one stressing the strength of systems and processes, the other of individuals.

To make the combination work, one dominant culture has to emerge, and it is unlikely to be that of the hot-shot trader or banker.